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U.S. Treasury Yields Edged Higher This Past Week

Market Data as of Week Ending 09/18/2020 unless noted otherwise.

EQUITIES
U.S. stocks were mixed last week as volatility remains elevated and investor sentiment has shifted toward contrarian themes. Small and medium sized company stocks generally outperformed large company peers and value stocks outperformed growth. Cyclical sectors such as energy, industrials, and materials outperformed whereas the consumer and technology oriented sectors lagged. Developed foreign stocks in Europe and Asia outperformed U.S stocks while Emerging Market stocks outperformed both U.S. and developed foreign markets.

BONDS
U.S. Treasury yields edged higher this past week as investors balance seeking quality and yield. Short duration high yield corporate bonds were the top performing segment followed by long duration investment grade corporate bonds. Short and intermediate corporate bonds have fully recovered and are outperforming government peers on a year-to-date basis. Investment grade corporate bonds are yielding approximately 2% and high yield corporate bonds are yielding more than 5.5%.

MACROECONOMIC DATA
The Fed revealed that policymakers expect official short-term rates to remain near 0% through 2023 and made no changes to its quantitative easing (QE) program. Initial unemployment claims declined again from the previous week to 860,000 and there are approximately 12.6 million Americans claiming ongoing unemployment benefits. In the UK, the Bank of England left policy measures unchanged but indicated that the central bank was ready to take further action if needed. Yoshihide Suga was elected as Japan’s prime minister by both houses of parliament and will fill the remainder of Abe’s term, until September 2021.

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U.S. Stocks Decline as Volatility Returns

Market Data as of Week Ending 09/11/2020 unless noted otherwise.

EQUITIES
U.S. stocks declined again last week as volatility increased. The Nasdaq Composite Index is down more than 10% from the all-time high it reached in the prior week. Both company size and style were irrelevant with more pronounced deviations across major economic sectors. Defensive sectors such as utilities, consumer staples, health care, and real estate outperformed whereas the energy, financials, information technology, and communication services sectors lagged. Developed foreign stocks in Europe and Asia outperformed U.S stocks while Emerging Market stocks lagged developed foreign markets.

BONDS
U.S. Treasury yields declined this past week as investor demand for high quality investments increased. Long duration government bonds were the top performing segment followed by long duration investment grade corporate bonds. High yield corporate bonds lagged as risk-off investor sentiment weighed on the asset class. Investment grade corporate bonds are yielding approximately 2% and high yield corporate bonds are yielding more than 5.5%.

MACROECONOMIC DATA
Economic data presented mixed signals as initial unemployment claims were higher than expected at 884,000 and the number of unemployed Americans filing continuing claims increased (to 13.4 million) for the first time since July. However, job openings were better than expected and recent retail sales data are demonstrating positive trends. In Europe, the UK and EU continue to clash as they began a new round of talks to plan their post-Brexit relationship while the ECB left its policy measures unchanged.

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S&P 500 Index Records Fastest Recovery on Record

Market Data as of Week Ending 08/21/2020 unless noted otherwise.

EQUITIES
U.S. stock prices were generally higher last week as the S&P 500 Index recorded the fastest recovery on record. It only took 126 trading days for the index to reach its prior peak which was over 10 times as fast as the average historical rebound. Both size and style were outsized factors as large growth stocks outperformed small value stocks by more than 6.5%. The energy, financials, industrials, and utilities sectors ended the week in negative territory. Information technology, consumer discretionary, and communication services were the top performing sectors. Developed foreign stocks in Europe and Asia lagged U.S stocks while Emerging Market stocks outperformed developed foreign markets.

BONDS
U.S. Treasury yields declined this past week as demand returned to higher quality and longer duration bonds. Long-term treasury bonds were the top performing segment followed by investment grade corporate bonds. While near term demand for credit risk may have declined, investment grade corporate bonds are yielding approximately 2% and high yield corporate bonds are yielding more than 5.5%.

MACROECONOMIC DATA
Initial unemployment claims unexpectedly rose this week to 1.1 million. However, the number of unemployed Americans filing continuing claims fell more than expected, and reached its lowest number (14.8 million) since early April. July housing data was encouraging with increases in housing starts and permits while existing home sales rose more than expected and surpassed their best level since December 2006. Economic readings in Europe and Asia were mostly negative as Europe reported worse than expected PMI data and Japan announced that second quarter GDP declined by nearly 8%.

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Unemployment Claims Declined This Week and Fell Below 1 Million for the First Time Since the Pandemic Began

Market Data as of Week Ending 08/14/2020 unless noted otherwise.

EQUITIES
U.S. stock prices were generally higher last week as economic trends demonstrate support for a sustained recovery. Analysts have increased S&P 500 earnings estimates for calendar year 2020 following steady declines that reached a bottom in July. There was no clear trend in performance based on company size; however, value stocks outperformed growth, regardless of company size. Value stocks outperformed despite negative returns in the real estate and utilities sectors. More cyclical sectors such as industrials, energy, materials, and consumer discretionary were the top performing sectors. Developed foreign stocks in Europe and Asia outperformed U.S stocks while Emerging Market stocks lagged developed foreign markets.

BONDS
U.S. Treasury yields rose again this past week. Investment grade corporate bonds lagged despite the yield advantage and favorable economic trends. Treasury bonds were the top performing segment as corporate bonds dealt with higher yields. While near term demand may have declined, investment grade corporate bonds are yielding approximately 2% and high yield corporate bonds are yielding more than 5.5%.

MACROECONOMIC DATA
Initial unemployment claims declined this week and fell below 1 million for the first time since the pandemic began in March. Other positive economic data included core inflation which rose 0.6% from the prior month, the biggest jump in almost three decades. On an annual basis, core inflation measured 1.6%, a four-month high, following 1.2% in June. Economic readings in Europe and Asia were mixed but stock prices were supported by a weaker US dollar and improved outlook that stimulus measures may accelerate the economic recovery.

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U.S. Treasury Yields Rose This Past Week

Market Data as of Week Ending 08/07/2020 unless noted otherwise.

EQUITIES
U.S. stock prices advanced again last week as the economy is showing signs of a durable recovery and coronavirus cases have been trending down. Small and medium sized companies generally outperformed large companies and growth stocks lagged, regardless of company size. All major economic sectors delivered positive returns with notable gains in industrials, financials, and industrials. While most sectors have recovered, those three along with utilities and real estate, remain in negative territory on a year-to-date basis. Developed foreign stocks in Europe and Asia lagged U.S stocks while Emerging Market stocks lagged developed foreign markets.

BONDS
For the first time in several weeks U.S. Treasury yields rose this past week. High yield corporate bonds were one again the best performing asset class, followed by investment grade corporate bonds. Despite the increased demand, investment grade corporate bonds are yielding approximately 1.9% and high yield corporate bonds are yielding more than 5%.

MACROECONOMIC DATA
Initial unemployment claims declined this week to 1.2 million, but more importantly, the Labor Department reported a better than expected addition of 1.76 million jobs in the month. As such, the unemployment rate declined from 11.1% to 10.2%. Other positive economic data included manufacturing data as July factory orders rose more than expected and the ISM manufacturing index rose to 54.2 last month, up from a June reading of 52.6 (a reading above 50 signals expansion).

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U.S. Stock Prices Recorded their Worst Weekly Decline in Almost Three Months

Market Data as of Week Ending 06/12/2020 unless noted otherwise.

EQUITIES
U.S. stock prices retreated and recorded their worst weekly decline in almost three months. Market leadership reversed as cyclical sectors such as energy, financials, industrials, and materials underperformed while stocks in defensive and higher growth sectors outperformed. Small and medium sized businesses underperformed as investor sentiment shifted away from higher risk assets. Developed foreign stocks in Europe and Asia outperformed U.S stocks for the second consecutive week and Emerging Market stocks outperformed developed foreign markets.

BONDS
U.S. Treasury yields declined for the week as concerns about the pandemic were priced into financial markets. Higher quality bonds such as government and investment grade corporate bonds outperformed, while high yield lagged. Investment grade corporate bonds are yielding approximately 2.3% and high yield corporate bonds are yielding more than 6%.

MACROECONOMIC DATA
Initial jobless claims rose by 1.5 million last week and there are nearly 21 million Americans claiming ongoing unemployment benefits. The Federal Reserve announced that as their baseline expectation, there will be no interest rate increases through 2022.

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Stocks Advance for Second Consecutive Week

Market Data as of Week Ending 05/29/2020 unless noted otherwise.

EQUITIES
Stocks advanced for the second consecutive week as both investor and consumer sentiment improved. A combination of cyclical sectors (Financials, Industrials, and Materials) and defensive sectors (Real Estate and Utilities) outperformed. Small and medium sized businesses also delivered solid gains. Companies in the S&P 500 are expected to finish the first quarter with an earnings decline of nearly 15% and the consensus forecast for calendar year 2020 is a decline of more than 20%. Developed foreign stocks in Europe and Asia outperformed U.S stocks during the week, but Emerging Market stocks lagged developed foreign markets.

BONDS
U.S. Treasury yields were mixed for the week as short and intermediate term bond yields narrowly declined while longer term yields nudged higher. For the second consecutive week, investment grade corporate bonds outperformed government bonds, while high yield was the top performing asset class. Investment grade corporate bonds are yielding approximately 2.5% and high yield corporate bonds are yielding nearly 7%.

MACROECONOMIC DATA
Initial jobless claims rose by another 2 million last week; however, continuing claims dropped to 21 million recording the first decline since the coronavirus pandemic began. As states begin to let businesses reopen, U.S. consumer sentiment posted a surprise gain in the preliminary May report. Europe and Japan announced additional stimulus measures, but that news was overshadowed by rhetoric from U.S. and Chinese officials threatening the trade deal reached earlier in the year between the two countries.

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As Jobless Claims hit 30 Million, S&P has Best Month Since 1987

Market Data as of Week Ending 05/01/2020 unless noted otherwise.

EQUITIES

Stock prices were mixed for the week as local and state governments across the U.S. begin to relax social distancing and reopen parts of their economies. Small and medium sized businesses outperformed their larger counterparts for the second consecutive week. The S&P 500 Index gained 13% in the month of April which its was best monthly return since 1987. Developed foreign stocks in Europe and Asia posted strong gains for the week and Emerging Market stocks outperformed developed foreign markets.

BONDS

U.S. Treasury yields were also mixed for the week as short-term bond yields declined while long-term yields increased. Corporate bonds, including below investment grade, outperformed as investor demand increased for higher yielding credit. Investment grade corporate bonds are yielding more than 2.5% and high yield corporate bonds are yielding more than 8%.

MACROECONOMIC DATA

Jobless claims rose 3.8 million last week, bringing the total to more than 30 million Americans (approximately 18% of the U.S. working population) who have filed initial claims for unemployment insurance since the COVID-19 crisis began. In an advanced estimate, the U.S. reported that gross domestic product (GDP) decreased at an annual rate of 4.8% in the first quarter of 2020. Not surprisingly, the largest detractor was a drop in consumption of -7.6%. On a positive note, China has reported that Wuhan, where the pandemic began, has no remaining cases of COVID-19 in its city hospitals.

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Mid Atlantic’s webinar series InfoxChange continues tomorrow with our guests from Tandem Wealth

Managing Market and Geopolitical Risk in a Complex World
Thursday, May 24 @ 4:00 pm ET
Join Tandem Wealth’s portfolio managers as they talk about creating a successful investment portfolio for your clients and group retirement plan participants in a complex world.
This session will discuss how following a disciplined yet adaptable investment process leads to better results for investors.
Key points and practical ideas for implementation:
  • Big Picture: Economic and Investing
  • Mini Cycles and Investment Strategy in a Trendless World
  • Investment Process
  • Risk Management and Sell Discipline

 

Mid Atlantic Congratulates Everhart Advisors!

Everhart Advisors was recently named 2018 PLANSPONSOR Retirement Plan Adviser of the Year.

Read more

 

 

Mid Atlantic Capital Group recognizes the uniqueness of financial advisors and the many business models that exists. That is why we listen, collaborate, and develop customized solutions for our business partners. We provide the structure, tools, and support that fits your model, enabling you to successfully grow your business.

To learn more about the ways Mid Atlantic can help you simplify your practice, contact John Wight at 800-693-7800 and jwight@macg.com.